Advantages of Internal Equity

Advantages of Internal Equity

The internal equity financing is referred to use the retained earning , it means that payment to share holder in the form of dividend is restricted and fund are utilized as financing source.
The following are the primary advantages of using internal equity.

1. No issue Cost:- Raise equity finance diffidently involve some cost but by using internal equity option this cost is Zero.
2. Ownership Structure does not change :- The other important factor of using the equity financing to keep the ownership structure in tact.
3. No Obligatory payment :- Dividend is not an obligatory payment instead it is at the discretion of management. So liquidity requirement of organization does not suffer.